I just so happened to switch home owners insurance when my policy ended in July. I signed up with my credit union who offered insurance and I was curious about in the scary event that my shop was broken into what would be covered. She said that as long as I didn’t sell anything, not a single thing, then it was covered under general loss. I cringed inside because I sold a piece of mine on Etsy and now it is technically a work shop and now not covered. Yikes!!

Do any of you carry a separate property loss insurance for your tools? And if so how do you go about getting it appraised and insured?

-- I'd like to believe Murphy's Law haunts my woodshop, because if it's Karma it would mean I had something to do with it. - K.R.

11 replies so far

I’ve got a commercial shop on our property, then I’ve got my personal shop on our property totally separated and some distance apart, can’t see either or from the other.

I have a commercial policy on the commercial shop. On my personal shop our homeowners covers it. Our agent told us to list anything of value in our home with photos and do the same for all the equipment in my shop.We have an umbrella homeowners policy. I built his wife a Chippendale style highboy and he paid for it in my personal shop the day he picked it up.

In these mountains where we live there are a lot of mom and pop woodworking shops that sell at shows. I doubt very seriously any of them have anything other than their homeowners because they’re retired and on a fixed income.

Why don’t you just casually ask your agent about it or read the fine print in your policy.

I think it’s pretty much the same way here Alongiron and if you don’t live inside the county seat then there are no business license to purchase. Property taxes can sho make up the difference though..hot dang they’re high here.

This is one of those things that might depend upon the insurance company. Mine told me that as long as I don’t take orders and don’t have “customers” on the premises, it is not a problem. They said that if I just make occasional small items to sell off premises, such as picture frames, boxes and that type of thing for a flea market or craft sale, then it isn’t considered operating a business, but is just part of the hobby. It is when people start showing up in the shop to get a custom item built that they start considering it a business.

That said, I am a long way from getting all the stuff for my own house done, so I don’t really have to worry about it. I wanted to ask in advance though, just in case.

When I had my shop at home, it was covered as ii considered it a hobby. Hobby is determined by the IRS as not making a profit. When you file taxes, if you don’t put it down as a business, it is a hobby.

I think they are just trying to scare you.However, I would talk to someone further up the chain and get their opinion. Another person to talk to would be one of their adjusters. they now what is and isn’t covered. Sales people just know how to make sales and not the details.

I think that “sales” line is a little nebulous. If you make a piece for your living room and then some time later, sell it on CL… are you a business? Nope!

There’s actually a very clear set of criteria for distinguishing between a business and a hobby written up by the IRS (mostly to prevent hobbiest from claiming a bunch of losses to reduce their tax bill). They’ll look at whether or not you are doing business in a “business like manner”. (i.e. business accounts at the bank, business money segregated from personal money, and most important of all…. are you making a profit and paying taxes). If you call yourself a business and write off losses for more than three years in a row …. your inviting an audit.

I’ve found that it is a very valuable skill in life to “know the right answer when told” :^)

Insurance company…. “if your shop is a business, we won’t cover the claim…. your shop isn’t a business, is it?”

I have an additional rider on my Allstate homeowner’s insurance policy here in Missouri. It adds an additional $5000 in coverage for business related losses. I asked the agent how that is determined and her response is that if the tool was being used for “business” purposes when the loss occurred then it would be covered under the $5000, if not it would be under the normal home owners plan. I think it costs 20 something a year.

I do have a business license for the computer consulting business I run out of the home and do declare both the computer and woodworking as business expenses. I have an accountant or CPA do my taxes each year and never have been audited.

Here in Minnesota, my insurance agent has told me that I am covered under the regular household insurance policy. I mentioned that I occassionally sell stuff, but he said it didnt matter as long as the shop isnt registered as a business. My insurance company is State Farm.